Republican lawmakers are stepping up pressure on the Obama administration to craft a Plan B just in case budget talks fall through and the debt ceiling remains frozen past the Aug. 2 deadline Treasury Secretary Tim Geithner has set. 

The Obama administration argues that Washington essentially has no other choice than to raise the $14.3 trillion cap. With that limit technically having been reached, Geithner is tapping into federal retirement funds and using other fiscal tricks to keep U.S. finances stable, but officials warn the red ink is so deep that within weeks Congress will have to either lift the cap or risk default. 

But on the sidelines of budget talks between White House officials and bipartisan lawmakers, GOP senators are calling on the administration to start preparing for an impasse, "just in case." The calls come after Congress just voted down budgets from President Obama and GOP Rep. Paul Ryan. While Geithner warns of fiscal Armageddon should Congress fail to act on the debt cap, the lawmakers claim there are still steps the administration could take to ensure the U.S. government meets its obligations. 

Nearly two dozen GOP senators wrote to Obama Wednesday, calling on him to develop "contingency" plans. They specifically urged his team to craft a fiscal 2012 budget that spends $2.6 trillion -- or around $1.1 trillion below the president's proposal. 

The reason they settled on $2.6 trillion is because that's the amount of revenue the government is projected to take in next year, meaning Washington would not have to borrow to cover expenses at that level. The senators said a budget that size "would easily cover" interest on the debt, Social Security and other essential spending. 

"It would not be pleasant operating under a 'debt ceiling budget,' and no one is recommending it. But it would not be Armageddon," they wrote, urging budget planners to figure out how to fund "essential services" on a "priority basis." 

Such a budget would nevertheless involve an incredible amount of spending cuts, or tax increases. The projected cost of Medicaid, Medicare, Social Security and other mandatory programs, plus debt interest, in 2012 approaches $2.4 trillion -- leaving very little for other federal spending unless cuts are made to those programs. 

Plus there's the challenge of getting through the rest of this fiscal year. 

GOP lawmakers were emboldened after a Congressional Research Service briefing suggested the government could potentially limp along after Aug. 2. 

One CRS report outlined several options for paying the bills. Without predicting what would happen, the report said the government could decide whether to pay its bills in the order they're received or prioritize them. Though Treasury officials say the latter is legally impossible, CRS cited a 1985 government report stating Treasury would be in its right to pay bills "in any order it finds will best serve the interests of the United States." Or, CRS said, the White House budget office could step in to change the course of spending. 

In a letter to Geithner from Sen. Jim DeMint, R-S.C., and 16 other Republicans, the lawmakers claimed there would be "more than enough money" to make debt payments and avoid default if the ceiling is not lifted. They too urged Geithner to prioritize spending. 

However, the CRS report makes clear that the federal government will eventually have to lift the cap so long as there's a deficit. And there's a big one -- estimated at $1.4 trillion for fiscal 2011. 

"If the budget continues to be in deficit and policy makers wish to avoid a default on
federal obligations, such methods cannot avoid the eventual necessity of raising the debt limit," the report said. 

To put the challenge in context, CRS said the government would probably have to assume $738 billion in debt above the current limit to finance operations for the rest of the fiscal year. If Washington wanted to cover this gap with spending cuts, it would have to eliminate all discretionary spending for the rest of the year, and then some. 

Another option would be to cut nearly 70 percent from mandatory programs like Medicare and Social Security. Or Washington could raise taxes by two-thirds.